Vanguard Reports Record 401(k) Balances

That figure is 18% higher than 2012 and the highest average balance recorded since Vanguard, based in Valley Forge, Pennsylvania, began tracking such figures in 1999.

Preliminary data from Vanguard shows several key trends for 2013 in its 401(k) and other defined contribution retirement plans. The figures, drawn from the company’s recordkeeping data, show the following:

• More companies are automatically enrolling employees into their plans. In an increase fueled mostly by larger plans (those with 1,000 or more participants), 34% of Vanguard plans, including 60% of larger plans, have taken this step to help their employees save for retirement. This is up from 24% from five years ago.
• The use of professionally managed investment options within 401(k) plans continues to rise. Forty percent of Vanguard participants now use one of these options, which include target-date funds, other balanced funds, and a managed account program.
• More than half (52%) of Vanguard plans are offering the Roth 401(k) feature, which enables participants to contribute after-tax income to their plan account. Because large plans were early adopters of this feature, this growth is coming primarily from smaller plans (those with less than 1,000 participants).
• More participants appear to be actively engaged in their retirement plans. In 2013, 60% of participants proactively contacted Vanguard via phone or the web about their plan account, compared with slightly over one-half (53%) of participants doing so 10 years ago.
• Despite continuing economic uncertainties, participants are not accessing the money in their accounts through loans or withdrawals any more than they have in the last several years. The number of Vanguard participants who have an outstanding loan or who took a withdrawal remained steady at 18% and 4%, respectively.
• Of the participants who left their company’s employment during the year, an increasing number—85% in 2013 compared with 82% five years ago—kept their money in the former employer’s plan, thus preserving those assets for retirement.

“While there is more to be done to help Americans save more effectively for their retirement, these are positive trends that show we are clearly moving in the right direction,” says Jean Young, senior analyst at the Vanguard Center for Retirement Research.

Additional data and trends will be released in Vanguard’s “How America Saves 2014” report, of which Young is the lead author. The report is scheduled to be issued in June.